The history of franchising.
The history of franchising.
As economies evolved, so did the concept of franchising. It is believed that our current concept of franchising comes from the mid 1800s when a major German beer brewer granted certain taverns the exclusive right to sell their beer and use trade name SPATEN.
The earliest signs of franchising in the United States dates back to the 1850's just after Isaac Singer invented the Singer Sewing Machine. During his search for an effective and affordable way to distribute his product, Singer ran into a couple of problems that prevented his company from becoming successful.
Singer's first problem was a lack of sufficient capital for manufacturing his machines. Secondly, no one was willing to buy his sewing machines without first being taught how to use them, which required effort that most retailers wouldn’t provide. Singer's solution was to charge licensing fees (franchise fees) to business people who would own the rights to sell his machines in certain geographical areas. The franchisees would also be responsible for teaching consumers how to use his machines, thereby creating sales opportunities.
Using the licensing fees to fund manufacturing, he was then able to afford to build his machines and then ship them directly to his newly formed distribution network.
Singer was the first company in the US to tap the power of franchising and made him and many franchisees very wealthy.
Singer's idea got noticed; and over the next several decades, many other companies began to copy and enhance his business model. At first, companies like Coca-Cola introduced franchising into their bottling and manufacturing areas in order to reduce financial risk, gain market share and bottle coca cola closer to the population centers thereby cutting down on trucking costs.
Automobile manufacturers used a network of licensed dealerships to sell and service their automobiles. Oil companies did the same thing with gas stations to keep those automobiles moving.
Later, companies such as McDonald's and Burger King took Business Format franchising to a whole new level by creating some of the largest franchise networks in the world.
Today, there are thousands of successful franchise brands with outstanding business models that provide products and services to consumers and businesses all around the world!
According to a study done by PricewaterhouseCoopers franchised businesses are responsible for 40% of all retail sales in the US. There are over ¾ of a million franchise establishments that generate almost a trillion dollars in sales. Franchises employ over 18 million people in the US directly and over 25 million indirectly.
The history of franchising - To learn more about this author, visit Jim Coen's Website.
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The word "franchise" comes from Old French meaning privilege or freedom.
As economies evolved, so did the concept of franchising. It is believed that our current concept of franchising comes from the mid 1800s when a major German beer brewer granted certain taverns the exclusive right to sell their beer and use trade name SPATEN.
The earliest signs of franchising in the United States dates back to the 1850's just after Isaac Singer invented the Singer Sewing Machine. During his search for an effective and affordable way to distribute his product, Singer ran into a couple of problems that prevented his company from becoming successful.
Singer's first problem was a lack of sufficient capital for manufacturing his machines. Secondly, no one was willing to buy his sewing machines without first being taught how to use them, which required effort that most retailers wouldn’t provide. Singer's solution was to charge licensing fees (franchise fees) to business people who would own the rights to sell his machines in certain geographical areas. The franchisees would also be responsible for teaching consumers how to use his machines, thereby creating sales opportunities.
Using the licensing fees to fund manufacturing, he was then able to afford to build his machines and then ship them directly to his newly formed distribution network.
Singer was the first company in the US to tap the power of franchising and made him and many franchisees very wealthy.
Singer's idea got noticed; and over the next several decades, many other companies began to copy and enhance his business model. At first, companies like Coca-Cola introduced franchising into their bottling and manufacturing areas in order to reduce financial risk, gain market share and bottle coca cola closer to the population centers thereby cutting down on trucking costs.
Automobile manufacturers used a network of licensed dealerships to sell and service their automobiles. Oil companies did the same thing with gas stations to keep those automobiles moving.
Later, companies such as McDonald's and Burger King took Business Format franchising to a whole new level by creating some of the largest franchise networks in the world.
Today, there are thousands of successful franchise brands with outstanding business models that provide products and services to consumers and businesses all around the world!
According to a study done by PricewaterhouseCoopers franchised businesses are responsible for 40% of all retail sales in the US. There are over ¾ of a million franchise establishments that generate almost a trillion dollars in sales. Franchises employ over 18 million people in the US directly and over 25 million indirectly.
The history of franchising - To learn more about this author, visit Jim Coen's Website.
Like this article? Share it with your friends
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John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
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